Table 5 also describes changes in NASE by sector, gender and race from 2001 to
towards the lower end of the income distribution than the male distribution. This indicates a distinct level of income inequality between men and women in NASE. In 2007 more than 60 percent of all men in NASE earned more than a R1 000 per month and 20 percent reported a monthly income in excess of R6 000, compared to 33 and six percent respectively for women in NASE. It is apparent from the figures above that, despite a modest shift to the right between 2001 and 2007, self-employed women remain crowded into low-paying activities.
Figure 2: Earnings distribution of men in non-agricultural self-employment, 2001 and 2007
Figure 3: Earnings distribution of women in non-agricultural self- employment, 2001 and 2007
Sources: Labour Force Surveys (LFS) 2001:2; 2007:2
Notes: 1. Earnings were adjusted using the Consumer Price Index for 2000 2. Estimates are for all non-agricultural self-employed individuals aged between 15 and 65 years of age who reported non- zero working hours of no more than 112 hours per week. 3. Data are weighted. 4. Earnings estimates include values for zero but exclude missing values.
As can be seen in the above figures, many individuals in self-employment reported earnings that can be termed ‘poverty returns’ (i.e. returns that would not allow an individual to escape poverty). Table 6 indicates the incidence of those in NASE who earn ‘poverty returns’, based on two poverty lines developed by Hoogeveen & Özler (2005:7). The first is the ‘conservative’ line A of R322 per month with 2000 as the base year, while the second is a more 'generous’ line B of R593 per month also with 2000 as the base year.
Table 6: Number and proportion of non-agricultural self-employed earn below the poverty line: 2001, 2007
Real poverty earnings line A Real poverty earnings line B
(R322 per month in 2000 prices) (R593 per month in 2000 prices)
2001 2007 2001 2007
Thousands Male Female Male Female Male Female Male Female
Total NASE below the line 122 273 118 279 239 427 223 423
(8.34) (8.85) (8.92) (11.06) (10.96) (11.27) (12.33) (14.11)
Percent
Share of total NASE 14% 35% 12% 32% 27% 55% 24% 49%
Share of total NASE below the
line 31% 69% 30% 70% 36% 64% 35% 65%
Sources: Labour Force Surveys (LFS) 2001:2; 2007:2
Notes: 1. Earnings were adjusted using the Consumer Price Index for 2000 2. Estimates are for all non- agricultural self-employed individuals aged between 15 and 65 years of age who reported non-zero working hours of no more than 112 hours per week. 3. Data are weighted. 4. Earnings estimates include values for zero but exclude missing values.
According to Table 6, a significant number of women in NASE earn ‘poverty returns’. In 2007, 427 000 women (almost half of all women in NASE) reported earnings below the ‘generous line’, and 279 000 (almost a third of all women in NASE) reported earnings below the ‘conservative’ line. More women than men reported earning ‘poverty returns’, regardless of the line chosen. Of the male non- agricultural self-employed in 2007, 223 000 (24 percent of all men in NASE) were earning below line B, and 118 000 (12 percent of all men in NASE) reported earnings that were below line A. It seems evident then from Table 6 that women are more likely than their male counterparts to be earning ‘poverty returns’ to NASE.
A modest decrease was observed in the absolute and relative numbers of self- employed who earned below the poverty line between 2001 and 2007. 42 The rise in the number of the non-agricultural self-employed earning ‘poverty wages’ (see Casale et al. 2004:996) has clearly ceased, reaching a plateau during the period. However, this trend has not altered the over-representation of self-employed females who earned below the poverty line. In 2007, women made up less than half of all those in NASE yet constituted 70 percent of all the non-agricultural self-employed earning below line A and 65 percent using line B. Indeed, it can be concluded from Table 6 that, regardless of the line chosen, the female non-agricultural self-employed are disproportionately found to be earning ‘poverty returns’ when compared to their male counterparts.
4.2.2 The distribution of weekly working hours for men and women in non- agricultural self-employment
Research presented in the literature review suggests that the female self-employed assign more of their time and energy to household work than do their male counterparts which reduces their productivity in market-work and lowers their earnings. Using the LFS 2001:2 and the LFS 2007:2, this section measures the distribution of hours worked per week for the non-agricultural self-employed by gender. Depicted in Figures 4 and 5, the gender distribution of hours worked per week indicates that men in NASE work substantially longer hours than the female self- employed. Indeed, compared to their female counterparts, self-employed men are far more likely to adopt a ‘normal working week’ pattern that resembles wage- employment. Figure 5 indicates that in 2007, only 16 percent of the male non- agricultural self-employed worked 20 hours per week, as compared to 32 percent of their female counterparts. Although there is evidence that suggest a shift to the left for both women and men in non-agricultural self-employment with more of the self- employed working fewer hours per week in 2007 compared to 2001, the shape of working-hours distributions of the male and female self-employed remains relatively constant during that period.
42 This is with the exception of those self-employed women who reported earnings below line B.
Between 2001 and 2007, the absolute number of these women increased by the modest number of 6,000.
The distribution observed in Figure 4 may indicate the adoption of flexible work schedules by the female self-employed. This could signal a personal choice on the part of self-employed women who would find it beneficial to adopt a flexible and part-time work schedule to accommodate domestic and childcare duties. Alternatively this could suggest that self-employment is one of multiple earnings sources for these
Figure 4: Distribution of hours worked per week for women in non- agricultural self-employment
Figure 5: Distribution of hours worked per week for men in non-agricultural self-employment
Sources: Labour Force Surveys (LFS) 2001:2; 2007:2
Notes: 1. Estimates are for all non-agricultural self-employed individuals aged between 15 and 65 years of age who reported non-zero working hours of no more than 112 hours per week. 2. Data are weighted.
workers. Qualitative studies of the self-employed suggest that many women in self- employment combine a range of income generating activities –more so than their male counterparts (see, for example, Allen et al. 2008; Bosma & Levie 2010; Chen et al. 2004; and Elam 2008). However, it may also represent a negative consequence in cases where financial and social constraints (such as household duties, inadequate capital to buy stock, the high cost of transport and fear of crime) prevent women from working more hours and earning a greater profit. It is likely that the disparity evident in this section can partially explain the significant gendered differences in the distribution of returns noted in section 4.2.1. As a result, it is necessary to control for the number of hours worked when comparing the incomes of the male and female self-employed, in order to accurately measure returns to NASE.
4.2.3 Hourly returns to non-agricultural self-employment
The previous section provided evidence that suggests gender differences in the monthly returns to NASE may partly reflect differences in the working-hour patterns of men and women in NASE. To test this, I estimated density functions by gender for log hourly earnings using the LFS 2001:2 and the LFS 2007:2. An Epanechnikov kernel estimator was used to approximate the density functions, and the resulting density plots are shown in Figure 6. A comparison of the distributions in 2001 and 2007 reveals a relatively modest shift towards the right during the period. This suggests a general increase in self-employment earnings over the period which is consistent with the findings of other studies on returns to self-employment (see, for example, Heintz & Posel 2008; and Steenkamp 2008).
The two panels in Figure 6 indicate that male and female earnings distributions are clearly distinct, even if differences in working hours are controlled for, with the female earnings distribution skewed to the left of the male distribution in both 2001 and 2007. It is apparent that males enjoy the advantage over females in both the lower quantiles of the distributions, as well as in the upper quantiles. It appears from these raw earnings distributions that there distinct level of gender inequality with regards to NASE earnings.
The difference evident in Figure 6 between male and female hourly earnings could be the result of other factors aside from gender, namely the concentration of the female self-employed in the informal sector. Indeed, NASE is a highly heterogeneous form of employment, and earnings may differ greatly between sectors. In order to control for the heterogeneity of NASE, I provide a breakdown of real mean hourly returns to NASE by gender and sector for the 2001-2007 period in Table 7. The table also allows a comparison to be made of earnings growth in wage employment.
Figure 6: Distribution of log hourly earnings for the self-employed by gender, 2001 and 2005
Sources: Labour Force Surveys (LFS) 2001:2; 2007:2
Notes: 1. Earnings were adjusted using the Consumer Price Index for 2000 2. Estimates are for all non- agricultural self-employed individuals aged between 15 and 65 years of age who reported non-zero working hours of no more than 112 hours per week. 3. Data are weighted. 4. Earnings estimates include values for zero but exclude missing values.
As expected, returns to employment differ considerably between sectors, with those employed in the formal sector reporting significantly higher earnings than those in the informal sector. This is particularly true for those in NASE with non-agricultural self- employed men reporting earnings almost four times greater than their female counterparts in the informal sector in 2007. This suggests that part of the observed gender difference in average real returns to NASE is due to the under-representation of non-agricultural self-employed women in the formal sector. However, even after controlling for sector, it is apparent from the table below that men reported higher hourly earnings than their female counterparts.
61 Table 7: Mean real hourly earnings for employment in South Africa, 2001-2007 2001200220032004200520062007Change 200 Male FemaleMale FemaleMale FemaleMale FemaleMale FemaleMale FemaleMale FemaleMale Fe Total (% per annu Self-employment*17.098.3918.598.5725.212.521.9612.5917.177.5818.11020.8411.813.66%6.7 (0.91) (0.71) (1.08) (0.72) (4.47) (4.74) (1.25) (1.21) (1.18) (0.59) (1.07) (0.98) (1.37) (1.11) Wage-employment**16.8512.9116.2113.5316.413.7718.6815.8616.3614.217.4714.4417.3814.690.52%2.3 (0.33) (0.27) (0.29) (0.30) (0.35) (0.28) (0.39) (0.34) (0.40) (0.37) (0.43) (0.39) (0.47) (0.41) Formal Sector Self-employment*38.4135.2241.5932.0244.0831.449.5848.8741.1535.0845.0738.9146.6337.733.57%1.1 (2.38) (4.38) (2.66) (4.14) (2.68) (4.70) (2.93) (5.51) (2.98) (4.17) (2.90) (4.10) (3.16) (4.31) Wage-employment 17.9616.9316.8516.8916.9616.4619.2817.9417.5116.3318.8516.9418.7717.930.75%0.9 (0.36) (0.35) (0.35) (0.48) (0.44) (0.44) (0.44) (0.48) (0.52) (0.59) (0.55) (0.62) (0.52) (0.48) Informal Sector Self-employment*9.114.888.695.249.114.6511.726.538.164.838.765.489.47.550.53%9.1 (0.51) (0.26) (0.61) (0.37) (1.26) (0.28) (0.83) (0.42) (0.48) (0.27) (0.49) (0.51) (0.63) (0.87) Wage-employment 6.046.485.665.514.846.425.536.145.15.985.15.746.077.370.08%2.2 (0.30) (0.60) (0.41) (0.52) (0.21) (0.78) (0.25) (0.73) (0.24) (0.47) (0.17) (0.56) (0.27) (0.81) Domestic work3.62.982.682.833.073.194.414.533.413.626.344.024.844.445.74%8.1 (0.37) (0.07) (0.24) (0.08) (0.26) (0.08) (0.42) (0.18) (0.37) (0.07) (1.50) (0.09) (0.36) (0.20) Source: Labour Force Survey (LFS) 2001:2; 2002:2; 2003:2; 2004:2; 2005:2; 2006:2; 2007:2 Notes: 1. Standard errors are in parentheses. 2. Estimates are for all non-agricultural self-employed individuals aged between 15 and 65 years of age who reported non-zer working hours of no more than 112 hours per week. 3. Return estimates include values for zero but exclude missing values. 4. Returns were adjusted using the Consumer Price Index for 2000. 5. Data are weighted. * Excludes those in agriculture. ** Includes domestic workers.
The evidence presented in Table 7 seems to confirm that real earnings for the female non-agricultural self-employed have risen at a faster rate than those for their male counterparts. From 2001 to 2007, average real hourly income for women in NASE increased by seven percent per annum compared to a less than three percent per annum for the male non-agricultural self-employed. Female earnings in NASE increased at a faster rate in the informal sector than in the formal sector. According to Table 7, informal non-agricultural female self-employed saw their hourly increased by nine percent over this period compared to 1.2 percent for the formal non- agricultural female self-employed. However, given the volatility associated with average returns to NASE, any conclusions about trends in returns to NASE must be treated with caution.
Given that real hourly returns to NASE increased by more than the hourly returns to wage-employment, it is interesting to compare the earnings of men and women in wage- and self-employment. While men in NASE earn more on average than those in wage-employment, the opposite is true for women in NASE. In 2007 the male self- employed earned on average R2.26 more hourly than his counterpart in wage employment, compared to the female self-employed who earned R3.55 less.
This imbalance is in part due to the over-representation of women in informal NASE.
In 2007 both men and women in formal NASE reported earnings that were more than double the earnings of their wage-employed counterparts. The difference between the earnings of the self- and wage-employed is less severe in the informal sector. In 2007, self-employed men earned 55 percent more on average than men in wage employment, while self-employed women on average received hourly returns more or less equal to those of the female wage-employed (excluding domestic workers). This may indicate that women, who choose to enter NASE rather than wage employment, do so for non-pecuniary benefits. However it may be far more likely that women choose to enter NASE as a result of considerable entry barriers to other more lucrative forms of employment.